How do you determine which stocks will be used in a strategy?
Our research process is described in the E-book “The Sungarden Hedged Investing handbook.” It describes the criteria we look for to initially qualify a company to be researched, how stocks are ultimately chosen for our “Sungarden 100” coverage list, and what triggers a stock being added or removed from one of our portfolios.

What is hedging and why do you do it?
Hedging is an attempt to limit the damage inflicted on your portfolio by a significant decline in the broad markets, while allowing you to continue investing toward your longer-term goals. We believe hedging is an excellent alternative to the typical guessing games and outright market-timing approaches so many investors and financial advisors use, particularly when market turmoil arises. Hedging, and varying the degree of our hedge at different points in time, is a great way to keep you on path toward your ultimate investment goals, while minimizing the impact of market noise on your portfolio…and your emotional state.

What does Hedged Dividend Investing mean?
We created a strategy that combines a set of stocks with above-average dividends with a systematic strategy to hedge versus major losses in value caused by a declining stock market. Most hedged portfolios are growth and preservation oriented, but they ignore the needs of investors that prioritize dividend income in their investment process. We created the Hedged Dividend strategy so that those investors would have a simple yet elegant way to combine risk-management with the pursuit of dividend income. We must be on to something, because the Hedged Dividend strategy is our most popular portfolio among our current clients!

What is the typical portfolio turnover of this strategy?
Our experience is that investment markets are often far from “typical.” Our hedged investing process is very flexible, so the amount of buying and selling (i.e. turnover) in our strategies will be as active as necessary to effectively pursue the objectives of each strategy. That said, the turnover rates will vary significantly by strategy, by design.

We expect that in most years, portfolios will turn over less than 70% of their holdings. The figure could easily be 1/2 to 1/3 of that. It really depends on what opportunities and risks the markets and individual stocks present to us.

What are your management fees?
Our fee for the Private Client and Managed Account services is based on a percentage of assets under management.

Would my funds be available to immediately withdraw should I need the money?
If there is enough cash in your account to cover the withdrawal amount you requested, you can typically receive the money by electronic transfer in 1-2 business days.

If your request requires us to free up cash by selling securities, it ususally takes about 4-5 business days to get those funds to you. From our experience, the best practice is to set up a link to your bank account during the on-boarding process, so we can simply deposit funds directly into your bank account upon request. This can help speed up the process significantly.

And if you have a specified cash amount to withdraw each month or quarter, we can set up your portfolio so that the cash balance will not go below your regular withdrawal amount, which makes the process smoother for you.

Which custodian do you use?
Private Clients have a choice between TD Ameritrade and Charles Schwab and Co.

Do you have diversification requirements (sector, industry, country)?
While that is a popular way to diversify in the money management industry, we have found that its value to the investor is highly overrated. We do monitor our holdings based on our 9 internally-established long-term investment themes, and we aim not to exceed more than a 35% weighting in any theme (at cost). Beyond that, we go where we think the opportunities are, but with an overriding focus on avoiding major drops in portfolio value along the way.

How much experience does the portfolio manager have?
Rob Isbitts, our Chief Investment Strategist, leads our investment committee, and has been in the investment management industry since 1986. He has managed private client account, third party (i.e. “wrap”) accounts for financial advisors, and was the lead manager of two mutual funds. He is a popular investment columnist and four time past member of the Worth 100 (the 100 best wealth managers in the U.S.). Rob believes in the use of hedged investment strategies within traditional managed accounts (i.e. not hedge funds).

Vincent Esposito, our Managing Partner, is a highly-experienced investor for private clients and like Rob, has invested through many different market environments (since 1994). Vince sat on the investment committee at his former firm, and has been a hedged investor for most of his career. Together Rob and Vince have amassed 140,000 hours of professional investment management experience.

Sungarden’s Jr. Analysts do not have grey hair, but they certainly know how to operate within our firm’s disciplined investment process. They actively participate in investment committee discussions and are primarily responsible for generating the fundamental and quantitative inputs to the investment decisions ultimately made by Rob Isbitts, our Chief Investment Strategist and Vince Esposito, our Managing Partner.